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R01 > Chapter 1 - UK Financial Services (European & Global Context) > Flashcards

Chapter 1 - UK Financial Services (European & Global Context) Flashcards

1
Q

What are the 4 essential functions of the Financial Services?

A

1) Provide access to and protect consumer savings
2) Allow savings to be lent to others
3) Provide protection against risk
4) Disperse risk (investment into different products)

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2
Q

What are the 4 key components of the UK Financial Sector?

A

Firms
Infrastructure
Regulatory Authorities
Markets

(FIRM)

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3
Q

What does the EBA, ESMA and EIOPA all relate to?

A

1) Bank
2) Stock Markets and Credit Rating Agencies
3) Life and Pensions

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4
Q

What is the purpose of the ESRB?

A

To monitor and assess the stability of the whole financial system (macro-prudential supervision)

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5
Q

What is the purpose of the ESFS?

A

To supervise individual financial institutions (micro-prudential supervision)

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6
Q

What is the purpose of the FSB?

A

Global version of ESRB

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7
Q

What is the purpose of the FATF

A

Monitor global initiatives against money laundering

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8
Q

What are the 5 main bodies that regulate the UK economy?

A

1) The Financial Conduct Authority (FCA)
2) The Bank of England
3) The Prudential Regulation Authority (PRA)
4) The Financial Policy Committee (FPC)
5) The Treasury

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9
Q

Which entity oversees the infrastructure that clears payments and settlements?

A

Bank of England

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10
Q

What are the 3 main clearing companies in the UK?

A

1) BACS
2) CHAPS
3) The Cheque and Credit Clearing Company

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11
Q

What is the purpose of the PSR?

A

To make payment systems work well for those that use them

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12
Q

What are some key facts about the PSR?

A

1) Subsidiary of the FCA
2) Independent
3) Strong regulatory & competition powers
4) Funded by the industry and accountable to Parliament

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13
Q

What is APACS and The Payments Council?

A

APACS - Main industry group for providers of payment systems

The Payments Council - Voluntary Forum with members from most large UK-based firms

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14
Q

What are the 3 statutory objectives of the PSR?

A

1) Payment systems operated and developed promotes the interests of businesses and consumers
2) Promote effective competition for payment systems between operators, payment service and infrastructure providers
3) Promote development and innovation in payment systems

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15
Q

What is the purpose of a Derivative?

A

Protects buyers/sellers against the increase/decrease in the value of an asset

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16
Q

What is a Multi-Distribution Organisation?

A

Companies that offer multiple “off the shelf” products with no advice

Page 22

17
Q

What is a Friendly Society?

A

Mutual companies that share profits with members. Many offer collective investment schemes

Page 22

18
Q

What is Fiscal Policy vs Monetary Policy?

A

Fiscal - Government ability to control taxation, borrowing and spending.

Monetary - Control of interest rates and money supplies.

Page 26

19
Q

What was the purpose of the Financial Services Action Plan?

A

1) Create a single market for Financial Services
2) Provide open and secure retail markets
3) Introduce state-of-the-art prudential rules and supervision

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20
Q

What 3 bodies were created as a result of the Financial Services and Marketing Act?

A

1) FSA
2) FOS
3) FSCS

Page 24

21
Q

What are some of the regulatory and competition powers?

A

1) Giving directions to set standards
2) Requiring operators to provide direct access to payment systems
3) Amending agreements relating to payment systems, including fess and charges
4) Acting against anti-competitive behaviour, alongside the CMA

Page 18

22
Q

What are the main entities the PSR talk to?

A

1) Payment systems operators (cards & interbank)
2) Payment Service Providers (banks and building societies)
3) Infrastructure providers
4) Industry bodies & consumer groups

Page 18

23
Q

Which entity regulates the Bank of England?

A

FCA

Page 19

24
Q

What is the main feature of on-exchange markets?

A

These are FCA regulated trading floors, for stocks & shares

Page 19

25
Q

What is the main features of over-the counter markets?

A

There are committees formed by market users, to ensure its smooth operation. Subject to fewer regulations

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26
Q

What are the 3 main financial markets?

A

1) Capital markets (Stock Market)
2) Money market (Wholesale Market for commercial lenders)
3) Foreign Exchange markets (OTC market for the trading of currencies)

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27
Q

What are considered “Core Services/Activities”?

A

1) Current/cheque accounts
2) Deposit or bank savings accounts
3) Will and executorship services
4) Mortgages and loans

Page 20

28
Q

What are considered “Indirect Services/Activities”?

A

1) Portfolio managements
2) Discretionary management services
3) Advisory management services
4) Execution-only services
5) Stockbroking services
6) Access to collective investment schemes

Page 20

29
Q

What 3 bodies were created as a result of the Financial Services Act 2012?

A

1) FPC
2) PRA
3) FCA

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